Tippical – Brexit Exports

The pique of the all-consuming Brexit saga looms ever closer and the likelihood of a no-deal scenario seems to be increasing steadily as the clock runs down.

The current impasse on the backstop agreement appears to be the sticking point that will undo the British Prime Minister’s plans of an orderly withdrawal. If Theresa May cannot convince her parliament to pass the current deal, then we will surely be staring down the barrel of an economic crisis.

If no deal is in place by the time we reach the end of March, we will likely see World Trade Organisation tariffs imposed on exports and imports to and from the UK. This will have many negative effects on the people of Ireland and indeed, Tipperary.

The first of this podcast series will focus on the toll a disorderly Brexit would take on Tipperary. The most at risk sector of our economy is the agri-food sector, with the UK accounting for a vast quantity of both our beef and cheese exports.

In the event of tariffs being imposed on these products, the economy will undoubtedly take a hit. With Tipperary being among the most vulnerable, due to the high volume of dairy and beef farmers in the county.

Professor of Economics at Dublin City University, Edgar Morgenroth, has conducted research on a county by county basis, analysing the most at risk areas of the country. His research has shown that suckler farmers in particular are one of the most at risk in Co. Tipperary. This lies mostly with the current cost of beef, which has been consistently poor over the course of the last year and a half.

BEEF INDUSTRY

As it stands, the price of a carcass, combined with dramatic weather events effecting the cost of feed and other incidentals, has pushed many suckler farmers to the brink of ruin. According to Professor Morgenroth, many will “run out of money” and “cease to be viable”. This vein of the industry is in crisis before the true effect of Brexit has even been felt. What will happen next could determine the future livelihoods of many farmers in Tipperary.

Ireland accounts for roughly 76 percent of the UK’s beef imports, around a quarter of a million tonnes per year. Tariffs on beef are especially high, with some up as far as 80%. This could deter British retailers from purchasing such an expensive import, forcing them to turn to more inexpensive markets for beef. This would result in the total loss of the UK market which would leave stockpiles of beef flooding the market at home and thus sending the price plummeting to bedrock.

Mid Tipp suckler farmer and Chair of the Tipperary Irish Cattle and Sheep Farmers Association, Sean Hayden, explained that he had already suffered the brunt of Brexit uncertainty, before any mention of potential tariffs lurking down the line.

The slump the Sterling has taken – due to the so far bungled attempt at withdrawing from the soon to be 27 member bloc – has seen meat factories make less money from a carcass and, subsequently, passing that loss on to the cattle farmer.

He cried out for some form of government support to tide farmers over until proper parameters were put in place to stabilise the markets. He felt that ensuring the cost of beef didn’t drop any further, alongside some form of grant scheme would prevent many farmers from going under.

DAIRY INDUSTRY

Another export industry facing instability is the dairy market. Irish cheese is a big seller on the UK market, exporting over one hundred thousand tonnes a year to Britain. Tariffs on dairy usually peak around 40%. This, much like beef, will be a strained industry. Edward Carr is a Tipperary dairy farmer and also the Chair on the board at Arrabawn Co-op.

He stressed that the real challenge for the industry would be from dairy destined for the UK market finding a new home on the Irish market, driving competition and bringing the cost of milk down. He felt that he might have to increase his output to maintain his business describing a scenario of “running faster to stand still”.

However, on a government level, there aren’t many options available to officials to assuage the fears of the boots on the ground. Minister for Agriculture, Food and the Marine, Michael Creed explained that damage would have to be done before any kind of compensation could be sought to replenish the coffers of farmers around the country.

His opposite number, Fianna Fail Tipperary TD Jackie Cahill, felt a pro-active approach should be taken to prevent farmers from going under, encouraging some sort of low cost interest loan scheme to ensure that farmers across the country didn’t face total ruin. As far as he was concerned, Deputy Cahill felt that it was nonsense to expect farmers to remain viable without some sort of state sponsored aid.

As Minister Creed stated, there is really no amount of preparation that can brace the agri-food sector for Brexit, however, farmers would appreciate some form of safety net to save them from the plummeting prices that could result from Brexit.

One thing both elected officials agreed upon was, regardless of the outcome on the 29th of March, the future trading relationship between our two nations will never be the same.

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